More precisely, top managers have suspicions about kickbacks from suppliers to the purchasing staff. This is so common, I guess I should not elaborate on this.

We have seen a number of factories where even the general manager does not know the BOM of his factory’s productions. The purchasing staff keep it in their own Excel files and do not want to share it. Introduce an ERP and they will do whatever they can to sabotage the whole implementation.

This can go on in your own facility. It depends on the level of dysfunction in the hiring.

Another reason to check your bill of materials is to detect poorly done sourcing. The engineering manager pushes for his cousin’s components to be purchased, the purchaser awards business to the supplier that gives the highest kickback or to the one that is easiest to deal with, the incoming QC problems are not fed back into the procurement process… and you end up with a really bad set of suppliers.

If the raw material of your recruiting is not excellent, then the output from these hires will give you all the above. I am writing to help you think about who you are hiring and how China is not the reason for your sourcing not being top flight. See aso Quality China Recruiting.

Gap in Quality Sourcing? Look at This!

Some companies actually have a “shadow sourcing cell” that is located off-premises and regularly challenges the purchasers. It keeps them on their toes. It ends up saving a lot of money – often more than 5% of the total purchasing costs.

This to me is fascinating. Companies know their purchasing is not trustworthy and then hire people to check on them. Why don’t they just fire the untrustworthy sourcing. Then hire people they can trust so they do not need an off site department!

Great hiring makes such problems go away. Mediocre hiring and these problems multiply.